General legal newsletter for August 2021

The most notable legal developments of August 2021 include the adoption of the Laws “On Transport” and “On Precious Metals and Stones” as well as the introduction of changes to the land legislation in continuation of the land reforms initiated by the Presidential Decree No. 6243. There were also changes with respect to state subsidization of PPP projects, state infrastructure support for investment projects, the refund and the offset of VAT, the conclusion of direct public procurement contracts, and purchases of vehicles for freight transportation.

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  1.  NEW LAW ON TRANSPORT 

• the main principles of activities in the sphere;
• powers of competent state authorities;
• the licensing of relevant activities; the certification and registration of vehicles;
• rules for transporting passengers and cargo;
• rights and obligations of carriers and customers (passengers);
• requirements to multimodal transport contracts;
• general principles of transport logistics;
• general rules for transportation security;
• liability under transportation contracts (a list of possible remedies is provided).

The Law enters in force on 9 November 2021.

Law of the Republic of Uzbekistan No. ZRU-706 of 9 August 2021

 2.  NEW LAW ON PRECIOUS METALS AND STONES 

• rules for extracting and processing precocious metals (gold, silver, platinum, and platinum-group metals) and precious stones (natural diamonds, rubies, emeralds, sapphires, alexandrites, natural pearls, and amber formations);
• rules for producing, transporting, importing, exporting, assaying, hallmarking, and selling jewelry products;
• the competence of the Cabinet of Ministers, the State Geology Committee, the State Assay Chamber, and other state bodies in the relevant areas;
• requirements to the activity and rules for licensing of affinage (refining) companies.

Law of the Republic of Uzbekistan No. ZRU-710 of 23 August 2021

 3.  CHANGES IN THE LAND LEGISLATION 

A Law introducing some changes into the land legislation has been adopted. These changes include the following:

- administrative and criminal liability for some land-related violations has been strengthened; these violations include unauthorized seizure of land (and, in particular, irrigated land); non-prevention (by a land owner/user/lessee) of unauthorized seizures of land; undue use or damage to land; untimely application for the registration of rights to immovable property; and violations of rules for the construction of residential property;
- criminal liability for the sale or unauthorized transfer of irrigated land has been introduced;
- the provisions of the Presidential Decree No. UP-6243 of 8 June 2021, which initiated a large-scale land reform, have been reflected in the Land Code. It has been provided, among other things, that:

• land shall generally be allotted only for full ownership, lease, or permanent use. However, other land rights provided to individuals and legal entities prior to 1 August 2021 (permanent possession, inheritable possession, temporary use, etc.) survive. Individuals and legal entities having rights of permanent use and inheritable possession to non-agricultural land shall be able to privatize it in accordance with the privatization legislation (which, however, has not yet been fully developed);
• land is now granted for permanent use only to state bodies, state establishments, state enterprises, and self-governance bodies for satisfying specific state or public needs; relevant decisions on the provision of land are taken by local municipalities;
• local municipalities do not generally have a right to allocate land for full ownership or lease directly; they only approve results of relevant online auctions;
• the Cabinet of Ministers directly allots land for the implementation of large investment projects (for more than USD 10 mln); the size of a land plot shall be proportional to the amount of investments;
• drafts decisions of local municipalities on land matters are subject to mandatory expertise by the Ministry of Justice.

Law of the Republic of Uzbekistan No. ZRU-708 of 16 August 2021

 4.  LAND FOR STATE AND PUBLIC NEEDS 

Following the Presidential Decree No. UP-6243 of 8 June 2021 and corresponding changes to the Land Code, the Cabinet of Ministers approved an Administrative Regulation on the procedure for allocating land for permanent use for state and public needs. Land for the relevant purposes is allocated to state bodies, state establishments, state enterprises, and self-governance bodies, based on decisions of regional municipalities. Only non-agricultural lands may be allocated. If agricultural lands are envisaged to be allocated, they must first be reclassified.

The Regulation is of some relevance for public-private partnership (PPP) projects, since according to the above Presidential Decree, land for PPP projects is first allocated to a public partner for permanent use and may, then, be leased out by the public partner to a private partner.

Resolution of the Cabinet of Ministers No. 573 of 27 August 2021

 5.  FINANCING OF PPP PROJECTS 

 6.  INFRASTRUCTURE FOR INVESTMENT PROJECTS 

A Presidential Resolution on measures for providing infrastructure for investment projects has been adopted. According to it, starting from 1 October 2021, the government will start to support investment projects worth more than UZS 200 bln (approx. USD 18.75 mln) by constructing external engineering and communications facilities (roads, power lines, gas pipelines, etc.). For a project to qualify, (1) investor’s own contributions to the project must be not less than 25% of the project value; (2) a relevant feasibility study must indicate that the construction of relevant facilities at the expense of the investor is unreasonable. The Cabinet of Ministers is instructed to develop a detailed regulation on the procedure for applying for the support.

It is to note that in accordance with the Presidential Decree No. 4434 of 10 April 2012, a similar incentive is already available for projects, in which foreign investors are involved. Where an investment project for more than USD 50 mln is implemented and a share of a foreign investor in the project is no less than 50%, the construction of engineering and communications facilities outside the relevant construction site is done at the expense of the state budget. This incentive is unconditional i.e. there is no need to prove that it is unfeasible for the investor to construct such facilities.

Presidential Resolution No. PP-5233 of 25 August 2021

 7.  SIMPLIFICATION OF VAT-RELATED PROCEDURES 

• starting from 1 October 2021, the establishment of the procedure for setting off amounts of VAT payable on received goods/services used for exported goods, regardless of that whether exports profits have been actually received (some reservations apply);
• starting from 1 January 2022, the abolishment of the mandatory requirement for a separate application to the tax authorities for the refund of a negative amount of VAT. A taxpayer will have the right to notify the tax authorities about his request to refund, while submitting tax returns for a relevant tax period.

Presidential Resolution No. PP-5231 of 24 August 2021

 8.  EXPERTISE OF DIRECT PUBLIC PROCUREMENT CONTRACTS 

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Kosta Legal Law Firm